UPDATE 1-Germany's Scholz wants deal on euro zone reforms next week

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BERLIN, Nov 28 (Reuters) - Euro zone members aim to agree reforms to make their currency union more resilient when they meet next week, including by broadening the powers of the ESM bailout fund, Finance Minister Olaf Scholz said on Wednesday.

In a speech seen as an answer to French President Emmanuel Macron’s calls for deeper euro zone integration which are unpopular with many in Germany, Scholz said the ESM should be able to lend to banks in an emergency and become a European Monetary Fund.

“(We want an ESM) with a bigger remit and possibilities for preparing and implementing aid programmes for euro countries which - despite good policies - have got into difficulties,” Scholz said at Humboldt University in Berlin.

He also said he wanted to promote a euro zone budget as part of the EU budget, to help investment, economic convergence, competitiveness and stability in the euro zone.

If euro zone finance ministers agree those measures at their meeting on Dec. 3, it would be a step towards making the euro zone more resilient but would fall short of the deposit insurance scheme needed to complete a banking union.

Deposit insurance is considered a key to bank stability, but Germany has held out. It wants banks to clean up their balance sheets first, to ensure German taxpayers will not have to pay for any past irresponsibility in other euro zone countries.

Those concerns have been aggravated by fears Italy’s rising borrowing costs under an anti-austerity coalition government could trigger a new sovereign debt crisis.

France, countries in southern Europe and some supervisory board members of the European Central Bank say risks have been reduced enough for the insurance scheme to start.

Scholz, whose Social Democrats (SPD) are junior partners in conservative Chancellor Angela Merkel’s coalition, acknowledged that banking union remained a long way off.

“A common deposit insurance scheme is at the very end of the road toward an economic and currency union,” Scholz said. “And the road to that goal is long and full of conditions.”

The European Commission late last year offered a watered-down plan to decrease risks in the banking sector.

Its European deposit insurance scheme (EDIS) is meant to cover insured savers (up to 100,000 euros) in case of a bank failure.

The Commission said it should be introduced more gradually than initially planned and discarded plans for a full sharing of depositor protection. (Reporting by Michelle Martin and Joseph Nasr; writing by Madeline Chambers and Joseph Nasr; editing by Robin Pomeroy)